Arch linuxI am seeing the same issue. Moving from a Win11 stream-PC to Linux. I just installed Fedora Kinoite today and went to import my scenes and sources. No more VLC media source. It did work in Kubuntu on my test yesterday.
Which distro are you on Nullifier?
Yes this is literally it's only use case for me. When I was using obs on windows I had an afk screen with a randomized selection of compilation videosCould always add the suggestion to https://ideas.obsproject.com/
It does seem like a missing feature for FlatPak - I would guess that people using the VLC source are (mostly) using it simply because it does allow for a playlist (unlike Media Source).